What if we’ve just seen the worst?

Ari Wald is out with his firm’s technical roadmap for 2019. He lists the numbers he believes will be the most important or meaningful for traders to be aware of. I thought this look at the history of cyclical bear markets occurring during secular bull markets was very interesting.

If Ari is correct, then we are currently enduring a cyclical bear market but the secular bull market that began in 2013 with fresh S&P 500 record highs is still intact. Other secular bull markets throughout history had endured their share of these cyclical bear markets without being thrown off course for good. This would be the best-case scenario for investors at this point – that the recent bear is a short-lived episode of which we have already seen much of the worst.

Here’s Ari’s take and some historical context, my Chart o’ the Day…

The table to the right lists the bear markets in the S&P 500 since 1929 (economic recessions are colored in red, secular bears are shaded in gray). We’ve found that cyclical bears in secular bulls (in white) are usually either long-and-shallow (1953, 1959, 1994, 2015) or short and sharp (1961, 1987, 1990), by our analysis. On average, the index drops 20% over an 8-month period and retraces 50% of the prior advance. This is why we believe the S&P 500 has endured the bulk of the magnitude and now requires time to base.

(click to embiggen!)

Josh here – we’ve already seen a 50% retracement of the 2016-2018 rally. The average cyclical bear in a secular bull has not required losses much deeper than that in order to make its point.


Big Numbers for 2019
Oppenheimer & Co – January 1st, 2019

Follow Ari on Twitter!

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. low cost vans commented on Sep 20

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2019/01/02/what-if-weve-just-seen-the-worst/ […]

  2. bank of montreal online commented on Dec 05

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2019/01/02/what-if-weve-just-seen-the-worst/ […]

  3. Regression Testing commented on Dec 18

    … [Trackback]

    […] Here you will find 79020 additional Information to that Topic: thereformedbroker.com/2019/01/02/what-if-weve-just-seen-the-worst/ […]

  4. sea food for sale online commented on Dec 30

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2019/01/02/what-if-weve-just-seen-the-worst/ […]

  5. zegarki patek philippe podróbki commented on Jan 01

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2019/01/02/what-if-weve-just-seen-the-worst/ […]

  6. situs judi commented on Jan 25

    … [Trackback]

    […] Read More here on that Topic: thereformedbroker.com/2019/01/02/what-if-weve-just-seen-the-worst/ […]

  7. royal bank commented on Jan 26

    … [Trackback]

    […] Find More Info here to that Topic: thereformedbroker.com/2019/01/02/what-if-weve-just-seen-the-worst/ […]